Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Oil & Gas - Exploration and Production industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Oil & Gas - Exploration and Production Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Oil & Gas - Exploration and Production Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Oil & Gas - Exploration and Production industry for Wednesday, September 18, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Oil & Gas - Exploration and Production industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Civitas Resources Inc’s Value Grade

Value Grade:

Civitas Resources, Inc. is an independent, domestic oil and gas producer focused on development of its assets in the Denver-Julesburg (DJ) and Permian Basins. The Company’s operations are focused along the Denver-Julesburg (DJ), Delaware and Midland Basins. Its development facilities are located in counties across the Front Range of northern and central Colorado, as well as Southeastern New Mexico and West Texas. Its acreage position in the DJ Basin is about 453,600 net acres and, in the Permian Basin, it is about 68,500 net acres. The Company has a total production of about 280,000 barrels of oil equivalent (BOE).

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Civitas Resources Inc has a Value Score of 87, which is considered to be undervalued.

When you look at Civitas Resources Inc’s price-to-sales ratio at 1.13 compared to the industry median at 2.08, this company has a lower price relative to revenue compared to its peers. This could make Civitas Resources Inc’s stock more attractive for value investors.

Civitas Resources Inc’s price-earnings ratio is 6.30 compared to the industry median at 11.11. This means it has a lower share price relative to earnings compared to its peers. This could make Civitas Resources Inc more attractive for value investors.

Now, let’s assess Civitas Resources Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 3.1, when compared to the industry median of 5.2, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Civitas Resources Inc’s shareholder yield is lower than its industry median ratio of 0.70%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Civitas Resources Inc’s price-to-book ratio is lower than its industry median ratio of 1.26. This could make Civitas Resources Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Civitas Resources Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Civitas Resources Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 6.85. This could make Civitas Resources Inc more attractive because the lower P/FCF ratio indicates that Civitas Resources Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

GeoPark Ltd’s Value Grade

Value Grade:

GeoPark Ltd is a Colombia-based company operating in the energy sector. As an oil and gas explorer, operator and consolidator the Company has assets and growth platforms in Colombia, Ecuador, Chile and Brazil. Working interests from operation in 42 hydrocarbon blocks comprise of natural gas exploration and production (E&P;) and crude oil production on land as well as offshore across over 700,000 acres. The Del Mosquito block in Argentina's Austral basin, and the Cerro Dona Juana and Loma Cortaderal blocks in the Neuquen basin are wholly owned by GeoPark Holdings Limited, while the Fell block in Chile's Magallanes region is 90% owned by the Company, with the remaining interest in associated infrastructure, production facilities, operating licenses and a technical database are held by state oil firm, Enap.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

GeoPark Ltd has a Value Score of 97, which is considered to be undervalued.

GeoPark Ltd’s price-earnings ratio is 4.1 compared to the industry median at 11.1. This means that it has a lower price relative to its earnings compared to its peers. This makes GeoPark Ltd more attractive for value investors.

GeoPark Ltd’s price-to-book ratio is lower than its peers. This could make GeoPark Ltd more attractive for value investors when compared to the industry median at 1.26.

You can read more about GeoPark Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Highpeak Energy Inc’s Value Grade

Value Grade:

HighPeak Energy, Inc. is an independent crude oil and natural gas company. The Company is focused on the acquisition, development, exploration and exploitation of unconventional crude oil and natural gas reserves in the Midland Basin in West Texas. It focuses on brownfield the Midland Basin and specifically the Howard and Borden Counties area of the Midland Basin. Its assets include certain rights, title and interests in crude oil and natural gas assets located primarily in Howard and Borden Counties, Texas, and to a lesser extent, Scurry and Mitchell Counties, Texas. Its assets are located in the northeastern part of the Midland Basin. The Midland Basin is part of the Permian Basin of West Texas and Eastern New Mexico. The Permian Basin covers an area of about 96,000 square miles and is comprised of five sub-regions including the Midland Basin, the Central Basin Platform, the Delaware Basin, the Northwest Shelf and the Eastern Shelf.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Highpeak Energy Inc has a Value Score of 79, which is considered to be undervalued.

Highpeak Energy Inc’s price-earnings ratio is 12.9 compared to the industry median at 11.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Highpeak Energy Inc less attractive for value investors.

Highpeak Energy Inc’s price-to-book ratio is higher than its peers. This could make Highpeak Energy Inc less attractive for value investors when compared to the industry median at 1.26.

You can read more about Highpeak Energy Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Ring Energy Inc’s Value Grade

Value Grade:

Ring Energy, Inc. is an oil and gas exploration, development, and production company. The Company is focused on the development of its Permian Basin assets. Its primary drilling operations target the oil and liquids-rich producing formations in the Northwest Shelf and the Central Basin Platform, in the Permian Basin in Texas. The Company's leasehold acreage positions total approximately 96,127 gross (80,535 net) acres, and it holds interests in approximately 1,043 gross (864 net) producing wells. All of its properties are located in the Permian Basin and its proved reserves are oil-weighted, with approximately 63% consisting of oil, 19% consisting of natural gas, and 18% consisting of natural gas liquids. Of those reserves, approximately 68% are classified as proved developed and 32% are classified as proved undeveloped. Its proved reserves are approximately 129.8 million barrels of oil equivalent (BOE).

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Ring Energy Inc has a Value Score of 95, which is considered to be undervalued.

Ring Energy Inc’s price-earnings ratio is 4.9 compared to the industry median at 11.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Ring Energy Inc more attractive for value investors.

Ring Energy Inc’s price-to-book ratio is higher than its peers. This could make Ring Energy Inc less attractive for value investors when compared to the industry median at 1.26.

You can read more about Ring Energy Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Riley Exploration Permian Inc’s Value Grade

Value Grade:

Riley Exploration Permian, Inc., together with its subsidiaries is an independent oil and natural gas company. The Company is focused on the acquisition, exploration, development and production of oil, natural gas, and natural gas liquids. The Company focuses on horizontal drilling and completions applied to conventional formations in the Permian Basin. The Permian Basin is an oil and natural gas producing area located in West Texas and the adjoining area of Southeastern New Mexico covering an area approximately 250 miles wide and 300 miles long, and encompasses several sub-basins, including the Delaware Basin, Midland Basin, Central Basin Platform and Northwest Shelf. The San Andres Formation is a shelf margin deposit composed of dolomitized carbonates. Its acreage is primarily located on large contiguous blocks in Yoakum County, Texas, which represents its Champions Field and Eddy County, New Mexico.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Riley Exploration Permian Inc has a Value Score of 89, which is considered to be undervalued.

Riley Exploration Permian Inc’s price-earnings ratio is 5.6 compared to the industry median at 11.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Riley Exploration Permian Inc more attractive for value investors.

Riley Exploration Permian Inc’s price-to-book ratio is higher than its peers. This could make Riley Exploration Permian Inc less attractive for value investors when compared to the industry median at 1.26.

You can read more about Riley Exploration Permian Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Oil & Gas - Exploration and Production Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Oil & Gas - Exploration and Production stocks as well as other industrys.

Choosing Which of the 5 Best Oil & Gas - Exploration and Production Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Civitas Resources Inc stock has a Value Grade of A.
• GeoPark Ltd stock has a Value Grade of A.
• Highpeak Energy Inc stock has a Value Grade of B.
• Ring Energy Inc stock has a Value Grade of A.
• Riley Exploration Permian Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 undervalued stocks in the Oil & Gas - Exploration and Production industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Oil & Gas - Exploration and Production Stocks

Want to learn more about Oil & Gas - Exploration and Production stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Wednesday, September 18
• 4 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, September 17
• Why Highpeak Energy Inc’s (HPK) Stock Is Up 5.54%
• Why Texas Pacific Land Corp’s (TPL) Stock Is Up 4.16%

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